Why is this is better than an ETF treasury fund, CDs, and high-interest savings accounts?
Answer: Treasury Bills "interest" is state & local tax-free on the money earned. So if you're in a high-income tax state and city they're worth it.ETF fund aren't always 100% in treasuries and charge fees.
Question (asked a dozen or more times in the thread) : How does bill interest work?
Answer: Treasury Bills "interest" is the difference between face value and purchase price. You buy a $10k bill at less than $10k, upon maturity, it is worth $10k. The difference between purchase price and maturity value is your "interest."
Tax Equivalent Yield Calculator For Savings Bonds, Treasury Bills, and Tax-Exempt Money Market Funds
https://www.mymoneyblog
How Buy and Sell Treasury Bills
https://thefinancebuff.com/treasury-bills-cd-money-market.html
When are the auctions? When can I place an order?
4, 8, 13, 17, and 26 week bills are auctioned every week.
52 week bills are auctioned every four weeks.
You can see recent results and the planned schedule at: https://www.treasurydir
4 and 8 week bills are usually announced on Tuesday, auctioned on Thursday, and settle on Tuesday.
17 and week bills are usually announced on Tuesday, auctioned on Wednesday, and settle on Tuesday.
13 and 26 week bills are usually announced on Thursday, auctioned on Monday, and settle on Thursday.
52 week bills are usually announced every 4th Thursday, auctioned on Tuesday, and settle on Thursday.
At a brokerage, you can usually can place an order between the announcement and auction.
At TreasuryDirect, you can place an order up to about 8 weeks in advance.
Top Comments
Treasury BILLS are currently paying over 5% for various maturity lengths under 1 year. These can be bought through most brokerages even without a TreasuryDirect account.
Treasury BONDS are paying 4% or less and have 20 or 30 year terms.
The 4 week bill ordering opens tomorrow 8/8, the deadline to buy it is sometime Thursday 8/10 morning depending on where you are buying it and it settles on 8/15.
On TD Ameritrade, they take your money on the 10th (take it out of the money you can trade with when you hit purchase which can be as early as the 8th) and buy the bill on the 15th during time which you earn no interest. Thus the reason that I stopped buying 4 and 8 week bills at auction. Secondary markets settle the next day so often a better deal. Treasury direct does not take the money from your bank account till the day it settles and Vanguard keeps it in the settlement fund earning interest till the day it settles as well. Not sure about the other brokerage houses. Also, not sure if you rollover the t-bills how the time between redemption and the next auction works as far as any interest you are losing as that is often a week of interest as well.
FYI, if you do the math, 4 weeks for $10,000 usually gets you about $40 in interest for letting them hold your money for 5 weeks.
The Monday auctions for 3 months and six months settle on Thursday so much less time to hold your money for nothing and less redemption downtime.
The money market funds often have repurchase agreements that are taxed at the state and local level but obviously more liquid. Am looking into the ETFs now.
Good luck to everyone!
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782 Comments
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On the other hand, I guess some people lost out being locked in a low paying CD.
I don't have any 'How to buy Tbills' link as I have not had any issue buying my iBonds and Tbills on TreasuryDirect without 'training'. I have uploaded a few screen shots I just made from TreasuryDirect website.
Step 0: Login to your account at https://www.treasurydir
Step 1: [Screen shot 1] Click on 'Buy Direct' from the menu bar
Step 2: [Screen shot 2] Select 'Bills' under 'Marketable Securities' and 'Submit'
Step 3: [Screen shot 3] Pick up the Tbill term and date you want to buy. There are 2 dates listed: Auction date = the deadline you must submit the order. Don't remember the exact cut-off time but I usually do that before 7am. Of course you can place your order days before the auction date. Issue Date = the settlement date when your money will be taken from your linked bank account. Make sure you have the full amount in your bank account by the issue date. The actual amount taken from your bank account will be less than the full amount as Tbills give you a discount upfront (think it as a prepaid interest).
Step 4: [Screen shot 4] The link 'View recent auction results' give you an idea on the discount in the past. Specify the amount of Tbills to buy, the source of funds is your linked bank account (you can set up multiple bank accounts). In the 'Schedule Reinvestment' section, you have an option to auto-roll your Tbill into the next one upon maturity for how many times you want within the next 2 years. At the end, you can specify which bank account to deposit your maturity payment (for no auto-rolling) or your next discount amount (for auto-rolling). Then you can submit your order.
Step 5: [No screen shot] You will be presented with your order review and you confirm your order.
All your order history and auto-rolling history are available under 'History' from the menu bar. The bank account and auto-rolling settings can be changed at anytime after you purchased the Tbills by going to 'Current Holdings' from the menu bar.
I hope this is helpful.
That said, in a non-retirement account this interest rate is just ok if you aren't in a state with high tax rate.
WealthFront is 4.8% APY and Marcus is 4.3%. Both gets to stackable rate bump through referral and ends up at 5.3% with no lock in or auto buy/sell.
Of course, there are others too, I just use them because its been easy to get referrals and thus keep the rate going.
Buying T-Bills in retirement account for when we don't want to invest in stocks looks attractive. Might as well buy SGOV at a small expense ratio though
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On the other hand, I guess some people lost out being locked in a low paying CD.
For brokerages, it depends. Two of my brokerages, TD Ameritrade and ETrade, do not offer auto-rolling. That is why I use TreasuryDirect. I have been with them for 3 years and have not had any issues. I am able to link 3 different bank accounts with them at the same time. And I can change my bank account and auto-rolling settings at any time.
https://www.andrewsfcu.
I've funds on Wealthfront but tempted to move it to Andrew. JUst to be clear, I'llonly have to pay federal tax on this 5.75%?
Afterwards I made a sandwich.
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